Back in June I got a pitch from Cliff Freeman's PR guy: "Cliff Freeman & Partners--the ultimate Fast Company ad agency?" Having followed the industry for long enough and having recently written a piece on Cliff Freeman's Canadian parent company, MDC Partners, I knew the answer was clearly: No. However, the unnamed flack for the agency best known for Wendy's "Where's the Beef" and Little Ceasers' "Pizza! Pizza!" slogans wasn't going down without a fight. When I politely told him I disagreed, he persisted. Some highlights from his argument:"CF&P is no longer perceived as being "'dated' and 'out of touch' with today’s brand needs;" "CFP has re-staffed and blown up the old structure;" "CF&P no longer has one type of client and one tone (humor)." Poor guy.
Well, fast forward a few months and it seems like these days the shop is lucky if it can actually hold on to ONE client. Today, it was reported that MDC Partners--which owns 77% of Crispin Porter + Bogusky--sold back its 20% stake in Cliff Freeman (reported somewhere between $1 million and $5 million). MDC's spokesperson explained the decision in an email to me: "At this stage in Cliff Freeman's evolution, both Cliff and MDC Partners have agreed that it is best for him to control 100 percent of his company. This will allow him to incentivize his new management team going forward."
Of course, this is the polite version of what's really going on. MDC's whole model is to invest in talent: Purchase a small stake in a company, give it resources to grow, and then boost ownership. However, as I pointed out in my June 2008 cover story on Crispin, the model has yet to prove itself: "MDC owns stakes in 40 agencies, but Crispin is its biggest source of profit. In fact, RBC Capital Markets estimates that MDC's 77% stake in Crispin is worth more than $300 million, far more than MDC's market value." And Cliff Freeman hasn't exactly been helping, with client losses from Snapple to Quiznos, and a recently ousted CEO, Jeff McLelland.
As long as MDC has Crispin it's fine--and the ridding of today's baggage will be a relief. However, Clayton F. Ruebensaal III, the new CEO of the beleaguered Cliff Freeman has a do or die situation on his hands. As BNET's Jim Edwards put it: "The move makes Freeman an independent shop as it faces the biggest crisis of its life--the collapse of its client base. Freeman currently appears to be running on accounts worth about $15 million in billings." Or, as Edwards puts, bankruptcy or shuttering the shop is not out of the cards.